Thursday, April 28, 2011

The ad hominem argument (Latin for "to the man") is an attempt to counter another's argument by making an irrelevant attack on the arguer rather than the argument itself. As such, there are two elements of a fallacious ad hominem: (1) the critic responds to an argument with a personal attack on the arguer, ignoring the argument itself. (2) The personal attack on the arguer is irrelevant to any assessment of the argument.

Types of ad hominemsAd hominem's are commonly divided into various categories, two of which are the abusive and circumstantial.

The abusive/direct ad hominem is a direct attack which irrelevantly questions or vilifies the arguer's character. It is argued that because the person's character is in someway defective, what they claim must be incorrect or unreasonable. This is generally thought of as being fallacious in that the character of a person does not (usually) have a bearing on the truth or falsity of the claim being made.

Examples of abusive ad hominem:

"That claim cannot be true. Dave believes it, and we know how morally repulsive he is."

Tom says "I think we should stop affirmative action because it creates inequalities." Mike replies "You need to stop being so racist."

The circumstantial ad hominem attempts to refute the arguer's claim by questioning or criticizing their personal circumstance. It asserts the personal situation or circumstance as the reason the arguer puts forth their argument and as such the argument should be discarded. Typically this is done by attacking the arguer by asserting that they are simply making their claim for self-interested reasons. The fallacy with this line of thinking is that though the personal circumstances of the arguer may explain their motives, it does not affect the truth or falsity of the claim being made.

Examples of ad hominem circumstantial:

"Of course the Senator from Maine opposes a reduction in naval spending. After all, Bath Ironworks, which produces warships, is in Maine"

“I think that we should reject what Father Jones has to say about the ethical issues of abortion because he is a Catholic priest. After all, Father Jones is required to hold such views.”

Legitimate Attacks on the Person
Due to the standard presentation of the ad hominem as being an informal fallacy, it can easily be mistaken to be a consistent error in reasoning. But the key question to ask before dismissing an ad hominem is whether the attack is relevant to the point being argued.

The classic example of it's legitimate use is when a cross-examining lawyer attacks the trustworthiness of a witness in order to cast doubt upon their testimony. In this instance, it would not be improper for the lawyer to point to a pattern of untrustworthy behavior on the part of the witness as it is directly relevant to the credibility of their testimony.

Tuesday, April 26, 2011

Why is it that some people have such a hard time saving money? One possibility is the use and abuse of mental accounting. Mental accounting refers to the theory which attempts to explain the way people sometimes subjectively frame monetary transactions. It looks at the inclinations people have to handle money differently depending one how it was acquired, where it is kept and/or what it's intended purpose is.

The simplest example of this would be how money won is treated differently than money earned. Say for instance you go to the casino with some friends and you take $50 with you to gamble with. You're down to your last $1 and you drop it in the slot machine and luckily win $300. So now what? Do you keep gambling? Buy a round of drinks for all of your friends? Contribute it to your IRA? Most people would continue gambling the money until all or most of it was gone. But why? The purchasing power of the $300 you won is no different than the $300 you had to work two or three days to acquire. But mentally it is treated differently. This is quite apparent if you ask yourself how much stress would you feel if you lost $300 cash you worked for vs $300 you won then lost at the casino.

Another example would be how purchase size can effect our decisions. Say for instance you are out shopping for a new coffee maker. You find the one you want for $70 at the store when a person comes up to you and says that you can get the same coffee maker on sale at a store 20 miles away for only $35. Would you go to the other store? Of course, that is a 50% savings, who wouldnt. But lets change the scenario and say that instead of a coffee maker, you're shopping for a new couch. You're at the store and you find the one you want for $2000. Someone comes up to you and says you can get the same couch at a store 20 miles away for $1965. Would you go to the other store or just buy the one at the store you're at? What if it was a car selling for $15000 at the place you're at and $14965 at the dealorship down the road? As you can see, as the purchase price goes up the $35 seems to be less valuable. But of course purchasing power of the saved $35 is the same no matter how it was saved.

Now I'm not trying to say that we need to stop using mental accounting and instead be completely rational about every single financial transaction we engage in. But it is something to ponder and it would probablly do us good to occasionally do a little self analyzing to determine how we go about making our decisions.

Monday, April 18, 2011

Alot of people seem to believe that we need more government to make things more fair. With a few exceptions I think this is complete b.s.. One example of government unfairness I have seen a lot of is the so called first time homebuyer tax credit. There are really two versions of this credit, the 2008 credit and the 2009 credit. The 2008 credit gave the home buyer an interest free loan of $7500 which would be repaid over 15 years via their tax returns. The 2009 credit gave home buyers $8000 which did not have to be paid back. It was just money in their pockets. So to recap on this little bit of government fairness; 1) if you buy a home in 2007 you are a sucker got nothing, 2) if you buy a home in 2008 you get $7500 interest free to be paid back over 15 years, 3) if you buy a house in 2009 you get $8000 free and clear. I don't know about you but it would take me a long time to save $8000. So, how is this fair?

Thursday, April 14, 2011

My morning commute seems to be the only time I have available to let my mind wander. Today I was thinking about the proposed end of quantitative easing 2 and its potential impact. Though I am not an economist I do play one on the Internet, so keep that in mind and tell me if you find some flaws in my thinking. Just to recap, quantitative easing is essentially the method the federal reserve is using to buy various assets from mortgage backed securities to federal treasuries using newly created money (the so called printing press). In regards to the later, this has really changed treasury buying. Not too long ago the federal reserve bought about 10% of the treasuries, foreign investors 50% and US investors 40%. Now the fed purchases about 70%, foreign investors 30% and US investors a small fractional amount. So if the federal reserve ends QE2, who will buy the new treasuries? If memory serves me correct Japan is the 2nd biggest buyer of treasuries. But with the problems they are facing, I doubt they would increase there purchases. So I guess that leaves China, Korea, and US investors as the predominant buyers. But to entice these buyers, the interest these investments pay would have to go up. An increase in the interest rates would have a bad effect on the federal government as more of the budget would have go towards interest payments. On the other hand, if the fed continues the QE the newly created money which will enter the system via the federal government will eventually cause inflation. This is already a major concern for Americans. Just look at the price of gold and silver. Also, continued QE would discourage foreign investors from buying treasuries since they would view it as further erosion of the dollar. So it seems like we are in a real catch 22. Maybe there is a light at the end of the tunnel, but we are just to far away to see it.